Retirement planning: How much will your OAS benefits be?

While most Canadians will qualify for the Old Age Security (OAS) pension when they retire, not everyone understands how the benefits work, or how much is paid out. If you're still wondering what you're entitled to when you retire, this article explains the basics.

What is Old Age Security?

Launched in 1927, OAS is designed to provide seniors with a modest monthly pension to cover basic living expenses.

When can I start receiving payments?

As soon as you turn 65, you are eligible to receive OAS. The month after you turn 64 you should receive one of two letters from Service Canada:

  1. A notification that you were selected for automatic enrolment
  2. A notification that you could be eligible for OAS and that you must apply as soon as possible

If you need to apply, or you do not receive a letter at all, you can complete your application online through your My Service Canada account, or mail a paper application to Service Canada, or return the application enclosed in your letter to any Service Canada office, up to 11 months before you turn 65.

If you like, you can also defer receiving OAS pension payments for up to five years, or until you turn 70. By deferring, your monthly OAS pension will increase by 7.2% for each year you delay receiving benefits, up to a maximum of 36%. If you are automatically enrolled in OAS, you can request your deferment through your My Service Canada account or by completing and returning your automatic enrolment letter.

How do I know if I'm eligible?

To qualify for OAS, you must be a Canadian citizen or legal resident, and have resided in Canada for 10 years after age 18. But even if you've spent extended time abroad, you can still qualify if you've spent at least 20 years in Canada after the age of 18 and were a Canadian citizen or a legal resident on the day before you left Canada. Additionally, if you are a Canadian and you are working outside the country for a Canadian employer, your working time abroad can qualify as residence if you return to Canada within six months of ending employment or if you turned 65 while still employed.

You may also qualify for an OAS pension or a pension from another country if you have been living in a country that has a social security agreement with Canada or if you’ve contributed to the social security system of a country which Canada has an agreement with.

How much are OAS payments, on average?

The amount of OAS pension you could receive is determined by how long you have lived in Canada after the age of 18. Payment amounts are adjusted quarterly (in January, April, July and October) according to the cost of living in Canada, as measured by the Consumer Price Index.

As you can see from the chart below, the 2020 average monthly amount paid by OAS is $614.14, which comes out to just under $7,400 a year.

  Average monthly amount for 2020   OAS reduction starts with income over OAS eliminated when income reaches
OAS pension benefit $614.14   $79,054.00 $128,149.00

Note that the amount you're eligible for also depends on the income you receive. There is an OAS pension recovery tax of 0.15% for each dollar you earn over $79,054, meaning your OAS pension is eliminated when you earn over $128,149 per year.

Are there spousal benefits?

Surviving spouses and common-law partners of OAS recipients are entitled to a survivor pension. Like the OAS pension itself, this benefit can be offset by recovery tax if your surviving spouse or partner is earning an income and eliminated if their earnings exceed $25,080. Spousal benefits can differ significantly based on your individual situation. Please refer to the Government of Canada website for more details.

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